Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

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Coy and its liqrs afsd entered into an agreemt with the Golden Leaf
Coy for the sale and transfer to that coy of the undertaking and i^pty
of the Empire Coy upon the terms therein mentd, and it was one of
the terms of the sd agreemt that every debenture-holder of the
Empire Coy should be entitled at any time within one month from the
date thof to request the new coy to allot to him fifty fully pd-up 1/.
shares in the new coy in respect of and in exchange for 50/. deben-
tures held by him in the Empire Coy, and in discharge of all principal
and interest due on such debentures, and that the new coy should
comply with such request ; And whereas it is expedient to bind all
the debenture-holders of the Empire Coy to accept pd-up shares in the
new coy in respect of and in exchange for their debentures of the
Empire Coy.

Now therefore it is agreed as follows : —

1. The sd agreement of the 31st day of Dec. 1889, shall be carried
into effect.

2. Each of the debenture-holders of the Empire Coy shall surrender
to the new coy to be cancelled the debentures of the Empire Coy held
by him or her, and the new coy shall allot to him or her fifty fully pd-up
1/. shares in the capital of the new coy in respect of and in exchange
for each 501. debenture so surrendered by him or her, and he or she
shall accept the same in discharge of all principal money and interest
due on the surrendered debenture or debentures.

3. All further proceedings in the actions of ClippertonY. The Empire
Mining Co., Limtd, 1889, C. No. 1867, and De Hocjhton v. The same
Co., 1889, D. No. 2096, shall be stayed.

4. It is proposed to submit the arrangement embodied herein to a
meeting of the holders of the debentures of the Empire Coy to be con-
vened by order of the High Ct of Justice pursuant to the provisions



736 ARRANGEMENTS — FORMS.

of tlie Joint Stock Cos (Arrangement) Act, 1870, and afterwards to
apply for tlie sanction of the Ct.

5. Tlie arrangement embodied herein is made subject to any modifi-
cations or conditions which the Ct may think fit to require or impose.

6. This agreement is conditional on the arrangement embodied
herein being sanctioned by extraordinary resolution of the Empire
Coy, and on its being sanctioned by the Ct as afsd, and unless it is

so sanctioned before the day of this agreement shall be at

an end.

In witness, &c.

In this case the company went into liquidation and authorized the liquidator, under
sect. 161 of the Act of 1862, to sell the undertaking to a new company, in considera-
tion of shares to be allotted to the members with a liability thereon, and of further
fully paid-up shares to be allotted to the company's debenture-holders who came
in and claimed debentures. A minority of the debenture-holders declined to come
in, and accordingly the above agreement was prepared, and, with the sanction of
the Court, meetings of the contributories were convened, and in due course the
sanction of the Court was obtained. See report of the proceedings. Empire Min'mg
Co., 44 C. D. 462.

The principal objection raised by the opposing debenture-holders was, that the
Court had no jurisdiction to force a debenture-holder to give up his security and
take shares instead. But Mr. Justice North held that there was full jurisdiction.
In thus holding, the learned judge was to some extent influenced by the judgment
of Hall, V.-C, in Mammoth CopjyeropoHs of Utah, set out in the 3rd edition of
Company Precedents, p. 607. In the case referred to. Hall, V.-C, held that
debenture-holders of a company were a class of creditors within the Act, and that
there was jurisdiction to compel them to accept debentures of another company in
satisfaction of all claims, and the Court of Appeal affirmed that decision. There
have been a considerable number of cases in which schemes compelling debenture-
holders to accept paid-up shares in a new company in satisfaction of their
debentures have been sanctioned.

And it is now well settled that there is jui-isdiction to sanction a scheme embody-
ing such a provision. Alabama, Xeiv Orleans, ^-c. Co., (1891) 1 Ch. 213.

Abstract of other Schemes on Transfer to New
Companies.

Darlaston Coal and Iron Coy, Limtd.

The company was being wound up compulsorily, and there was a debenture
holders' action pending. The scheme provided that the debenture holders and
unsecured creditors should accept fully paid-up shares in the new company in
satisfaction of their debts. The scheme was approved at meetings convened by the
Court, and Jessel, M. R., made an order confirming the scheme 25th June, 1877.
The order is set out on p. 553 of the 2nd edit, of Company Precedents ; and see
report, W. N. (1877) 165.

The Great Western Colliery Coy, Limtd.

In this case the scheme of arrangement was embodied in an agreement dated
18th April, 1878, and made between the company and its liquidators of the one



ARRANGEMENTS FORMS. 737

part, and A. and B., on behalf of themselves and all the other debenture holders of
the company, of the other part. Tlie company was being wound up under super-
vision. The scheme provided for the sale of the undertaking- to u new company ;
that shares should be allotted to the members of the old company; the new com-
pany should undertake all the liabilities of the old company; the trustees should
concur ; the new company should be at liberty to raise 20,000/. debentures as a first
charge on the undertaking in priority to the existing debentures ; that the deben-
ture holders of the old company should accept debentures of the new company,
ranking as a second charge to the extent of one moiety of the principal monej^s and
interest due to them, and should also receive fully paid-up A shares in the new
company in satisfaction of the remaining moiety. A petition was then presented,
and an order was made 19th July, 1878, by Hall, V.-C, sanctioning the arrange-
ment. The scheme and petition will be found set out at p. 557 of the 2nd edit, of
Company Precedents.

Llynvi, Tondu, &c. Coal and Iron Coy, Limtd.

This company was being wound up under the supervision of the Court. The
scheme provided for the transfer of the undertaking to a new company, and that
each member of the old company should be entitled to an ordinary share in the new
company for every share in the old company conditionally on his subscribing or
procuring the subscription at par of a preference share in the new company for
every ordinary share, the debenture holders to extend the time for payment of the
principal, and to reduce the rate of interest as regards arrears ; composition of 10s.
in the pound, half in cash and half in preference shares fully paid, to be given to
the ordinary creditors ; half the surplus profits of the company to be carried to a
debenture redemption fund ; the debenture holders to have votes at election of
directors ; committee to superintend the reconstruction. The scheme was submitted
to meetings of the debenture holders and creditors of the company, and approved,
and on 30th January, 1880, an order was made by MaKns, V.-C, sanctioning the
scheme. The scheme was prepared by Lord (then Mr.) Macnaghten. It is set out
at p. 553 of the 2nd edit, of Company Precedents.

Llanrwst Lead Mining Coy, Limtd.

This scheme was sanctioned by Hall, V.-C, on petition, in May, 1881. The
winding-up was under supervision. The order to convene the meetings of creditors
and contributories was made 12th April, 1881, and the meetings were held on 9th
May, 1881. The scheme is set out at p. 686 of the 5th ed. of Company Precedents.

The North- Western, &c. Coy, Limtd.

This scheme provided for the transfer of the undertaking to a new company, and
that each holder of a debenture, or debentures, of the old company should receive
fully paid up shares at par in satisfaction of his debentui-es, and that the share-
holders of the old company should receive ordinary shares fully paid up in the new
company. The scheme was sanctioned by Cliitty, J., 22nd April, 1882. It is set
out at p. 603 of the 3rd ed. of Company Precedents.

The Dominion of Canada Freehold Estate and Timber Coy, Limtd.

New company to be formed. Debentures to be exchanged for perijetual deben-
tures of the new company. Holders of rent-charge securities of the old company
P. 3 B



738 ARRANGEMENTS — FORMS.

to exchange same for debentures of the new company, and to accept fully paid up
shares in new company in satisfaction of arrear of rent-charge. The new company
to undertake all the debts and liabilities of the old company. The existing securi-
ties to be abrogated. The old company to be dissolved. The new company to execute
deed-poll covenanting with the creditors and holders of rent-charge securities and
debenture holders of the old company to observe the provisions of the scheme, &c.

The above scheme, after considerable opposition on the part of the debenture
holders, was formed by Chitly, J., 9th August, 1886 : see Report in 55 L. T. 347,
and for order, Reg. lib. A. 1525. Under this scheme the shareholders in the old
company got nothing-. It was alleged and shown that they had no interest in the
assets. The scheme is set out at p. 689 of the 5th ed. of Company Precedents.

The Giilcher, &c. Coy, Limtd.

In this case the arrangement provided for a transfer of the undertaking to a new
company, freed and discharged from the debenture holders' claims, and that the
consideration should be 16,000^. cash to be paid to the liquidator, and the allotment
of 20,000 1?. B shares in the new company credited as paid up; and the scheme
provided that the cash should be api^lied, first, in payment of the expenses of the
winding-up and of carrying the scheme into effect, and of the debenture holders'
action, and of the committee of creditors ; and, secondly, towards payment of the
debts and liabilities of the company in accordance with the rights and priorities of
the parties to whom or in whose favours such debts and liabilities exist ; and,
thirdly, that the B shares and any surplus cash should be distributed by the
liquidator among the members of the old company in accordance with their rights
and interests in the assets of that company, and that the creditors and others
having claims against the company in respect of such debts and liabilities should
accept in full satisfaction and discharge thereof the provisions for their benefit
made as aforesaid. The scheme was sanctioned by Stirling, J., in February, 1888,
and will be found set out at p. 623, 4th ed. of Company Precedents.

Tlie Commercial Banking- Coy of Sydney.

Assets to be transferred to new company with 2,000,000?. capital in 25/. shares.
Shareholders to receive shares with 12/. IQs. credited balance, to be paid up by
instalments. Creditors on current account to be paid off by instalments ; other
creditors to get deposit receipts, payable by instalments. Sanctioned by Vaughan
Williams, J., 24th June, 1893.

National Bank of Australia.

The assets to be transfen-ed to a new company with a capital of 4,000,000/. in
150,000 preference shares of 10/. each, and 250,000 ordinary shares of 10/. each.
The shareholders of the old company to receive ordinary shares with 41. per share
credited, and to be relieved from payment of ('alls in the old company. General
creditors to receive two-thirds of the amount due to them in deposit receipts, pay-
able in five, six and seven years, and the balance in preference shares with provision
for advances. Sanctioned by Vaughan WiUiams, J., 27th June, 1893.

The City of Melbourne Bank, Limtd.

Assets to be transferred to a new company with a capital of 1,500,000/. in 100,000
proforcncc shares of 5/., and 20,000 ordiuary shares of 5/., the ordinary shares to be



ARRANGEMENTS FORMS. 739

allotted to the members of the old compauy, with 21. 10s. per share credited as paid
up. Every member of the old company on taking up his shares in the new company
to be released from liability in respect of the old company. The new company to
issue deposit receipts for four-fifths of the amount due to the creditors carrying
interest, and payable in equal amounts at the expii-ation of five, six, seven and
eight years. The creditors to receive preference shares fully paid up for the balance
due, or, at the option of the creditor, balance to be satisfied by a deposit receipt,
payable ten years after date, carrying interest at 4i per cent. Sanctioned by
Vaughan Williams, J., 22nd July, 1893.

The Commercial Bank of Australia, Limtd.

The assets to be transferred to a new company with a capital of 600,000/. in
30,000 preference shares, and 30,000 ordinary shares of \Ql. each, the ordinary
shares to be issued to the shareholders of the old company, or to the public on pay-
ment of 10/. per share. The uncalled capital of the old company to be included in
the sale, and to be called up, but a member taking up his ordinary shares in the
new company to be relieved from his calls in the old company. The new company
to issue to the general creditors deposit receipts for two-thirds of the amount due,
carrying interest and payable at the expiration of five years, but with power for the
company to pay off before maturity on notice, the remaining one-third to be satisfied
by the allotment of fully paid up preference shares. Other creditors to receive fully
paid up preference shares. If the assets taken over do not realise a certain figure,
the dividends on the ordinary sbares to be retained and applied in making good the
deficiency. Sanctioned by Vaughan Williams, J., 10th August, 1893.

The London Chartered Bank of Australia.

The assets and liabilities to be transferred to a new company with a capital of
4,000,000/., divided into 62,500 ordinary shares of 40/. each, and 150,000 5| per
cent, preference shares of 10/. each, the remaining liability of 20/. per share on the
shares in the old company to be called up. The shareholders in the old comjjany
to receive corresponding allotments of ordinary shares in the new company, with.
15/. per share credited. The general creditors to receive fully paid-up preference
shares of the new company ; other creditors to receive deposit receipts. The
dividend on the ordinary shares in the new company limited until all deposit
receipts cleared off. Sanctioned by Vaughan Williams, J., August, 1893.

The Queensland National Bank, Limtd.

Certain alterations to be made in the articles of association ; the dii-ectors to call
up the uncalled capital. Capital to be reduced by cancelling 21. per share of paid-up
capital. New shares to be issued. Creditors to accept deposit receipts each for
one-twelfth of amount due maturing at intervals of six months. At option of
creditors bank to issue to them negotiable deposit receipts to bearer. Dii-ectors to
have discretionary power of granting advances to depositors, &c. Sanctioned by
Wright, J., as vacation judge, 13th September, 1893.

Boothman's, Limtd.

The undertaking to be made over to a new company, and the holders of the fii'st
and second debentures to take first and second debentures of the new company.
Certain siuns receivable under various compromise agreements to be applied in

3b2



740 ARRANGEMENTS — FORMS.

paying preferential creditors, and, subject thereto, the costs of the liquidation,
and any balance to be distributed amongst the unsecured creditors. The general
creditors to receive fully paid-up shares in the company. All further proceedings
in the debenture action to be stayed. Sanctioned by Vaughan Williams, J.,
January, 1894.

The Emma Coy, Limtd.

The undertaking to be made over to the new company, with a capital of 150,000/.,
divided into 600,000 shares of 5s. each. The debenture holders to receive four 5s.
fully paid-up shares in respect of every II. due, or five like shares with 4?. credited
in respect of every 1/. due. The shareholders to receive shares of 5s. each with 3s.
credited. Sanctioned by Vaughan Williams, J., 17th June, 1895.



The Liberator Permanent Benefit Building Society, and Lands Allot-
ment Coy, Limtd, and the House and Land Investment Trust,
Limtd.

The scheme provided for the transfer of the assets of the three companies to a
new company, with a capital of 600,000/. in 1/. shares, the new company to pay
for the assets 600,000/., with an option to satisfy in paid-up shares. The con-
sideration to be distributed amongst the creditors and shareholders in specified pro-
portions. The new company to create and issue debentures of a specified character,
and these debentures to be offered to the creditors and members of the liquidating
companies, the proceeds of the debentures to be applied in clearing off certain
liabilities incurred in the winding-up and costs, charges, and expenses, and in
providing for the developing and completion of the properties. Specified persons
to be the directors. Provisions for nominees of trustees of the deed, and other
ancillary provisions. Sanctioned by Vaughan Williams, J., 22nd June, 1895.



New Zealand Loan and Mercantile Agency Coy, Limtd.

The winding-up was under a compulsory order, and by the scheme a new com-
pany with the same name was formed to take over the assets and liabilities.
Forthwith a considerable call was to be made on the old ordinary shares, the
holders of each of which were to have two new ordinary shares of a smaller amount,
with a small sum credited as paid up thereon, and one preference share. Dates
were fixed for payment of the instalments on both classes of shares, and acceptance
with payment of the first instalments released the liability for calls on the old
shares. Special provisions were inserted to satisfy the holders of certain "sixth
issue " shares in the old company ; extending the time for coming in in the case of
shareholders on the colonial register ; and paying prior claims, interest on certain
debentures and other securities, and the costs of the liquidation, the scheme, and a
debenture holder's action. Elaborately framed clauses were inserted for the
creation of three classes of debenture stock, called ' ' prior lien debenture stock, ' '
" A debenture stock," and "B dcbentm'e stock," and for the distribution of these
stocks among the holders of the debenture stock, debentures, and mortgages of the
old company. There was also a special provision for getting in certain mortgages
guaranteed by the old company, and, after payment of the proceeds to the holders
ihfTfof, for recouping their loss (if any) by giving them new debenture stocks. The
scheme also provided for Kcttlcmcnts with the mortgiigces and holders of guaran-



ARRANGEMENTS — FORMS. 741

teed mortgages, subject to rertain consents. A percentage on their claims was to
be paid to unsecured creditors, the balance being satisfied by new debenture stock,
and there being a special provision as to small creditors. After the scheme became
binding certain claims and securities on the old company were to be held in trust
for the new company and the trustees of the new stock issue, so as to enforce calls
and otherwise carry out the scheme. Proceeds of certain properties were to be
applied partly in redemption of the new issues and partly in the business of the
new company. The scheme also provided for the appointment and remuneration of
the trustees of the new stock issues, the appointment and certain duties of auditors,
the provisions to be inserted in the trust deeds and memorandum and articles, the
appointment of directors, restrictions on transfer, &c. ; and there was a clause
providing for its annulment, even after sanction by the Court, in certain events.
It was sanctioned by Vaughan Williams, J., in 1894, and is set out in Co. Prec,
Pt. II. 6th ed. p. 674.



National Insurance and Guarantee Corporation, Limtd.

Here again the new company took over the assets and liabilities of the old, the
scheme providing for a novation as to the policies, on the terms that the winding-up
and reconstruction were to be no defence to proceedings on them, while the sus-
pension of payment of premiums on account of winding-up was condoned on arrears
being forthcoming by a specified time. In like manner a time was limited for
payment of the sums assured by policies which had in the meantime fallen in, and
certain interest was capitalized. The scheme also provided for handing securities
of principal debtors to the persons guaranteed ; for sending in policies, &c. for
indorsement or in exchange for new ones ; for payment of salaries and costs ; for
the execution of a deed poll by the new company to perform the obligations imposed
by the scheme, &c. The material parts of the scheme will be found in Co. Prec,
Pt. II. 6th ed. p. 684.



Harris' Navigation, &c. Coy, Limtd.

In this case the assets of the old company were transferred to the new company
free from certain debentures which were to be cancelled, debentures of the new
company being issued in exchange. Certain "new priority " debentures of the old
company were to be paid off by the new one. The holders of old first preference
shares were to be entitled to preference shares in the new company, and certain,
debenture holders were to exchange their secui-ities for preference shares and deben-
tures of the new company. Holders of other preference shares and of ordinary-
shares in the old company got a percentage of the amount in ordinary shares of the
new one with a sprinkling of debentures, the acquisition of debentures issued to
shareholders being conditional on allotment of shares being accepted. Some of the
ordinary shares were reserved oy the new company for outside issue. The new
company was to pay the debts of the old one and the costs of liquidation, and in-
demnify the old company. The shares of the new company as soon as fully paid up
were to be converted into stock. The scheme also pointed out how the profits of
the new company would be applied, and provided for the business being taken over
as a going concern, the liquidator to carry it on in the meantime. The scheme was
sanctioned by Chitty, J., in August, 1888, and is set out in Co. Prec, 6th ed. Pt. II.
p. 687.



742 AREANGEMENTS — FORMS.

Arrangements for staying "Winding-up.

Midland Uruguay Eail. Coy, Limtd.

Form 837. 1. In this scheme the expression "the debenture stock " means and

Arrears of includes the debenture stock of the coy now outstanding of the nominal

interest on amount of 1,131,375^., and (except where siibject or context otherwise

stock' to^be requires) such additional debenture stock as may be hrftr issued in

satisfied by a pursuance of the power in that behalf hnftr contained ; and the

cashra^d'stri- ^^P^^ssion " debenture stock holders " means holders of the debenture

butiou of stock. And " the directors of the coy" means the directors who were

on s, a com- ^^ office when the windin2:-up of the coy coiumenced, and, when
panys option. .

Stock holders appointed, the two directors mentd in clause 7 of this scheme.

to be repre- 2. The interest now in arrear on the debenture stock being one

sented on , *'

board. year's interest, at the rate of 6 p.c.p.a. up to the 1st of May, 1892,

Petition for g^iall be satisfied and discharged at the coy's option, either by the

■winding - upto _ , ° . .

be withdrawn payment and distribution of a sum of 45,255^. in cash (less income tax)

and debenture ^^ ^^^^ amons:st the debenture stock holders in proportion to their
actions , , ° . ^ ^

stayed. respive holdings of such stock, or by the delivery to the Law Deben-

ture Corporation, Limtd, of the sum of 113,200/. 3|- p.c. Uruguay
Government bonds, and, on such delivery being made, the sd coy shall
be freed and discharged from all claims whatsoever in respect of the
sd shares of interest. The Law Debenture Corporation, Limtd, shall
hold the said 113,200/. 3i^ p.c. Uruguay Government bonds upon trust,
either to sell the same and distribute the proceeds thereof amongst the
debenture stock holders in proportion to their respive holdings of such
stock, or in lieu thereof, to deliver the sd Uruguay Government bonds
at the price of 40 p.c. in satisfaction of the sd interest, and in respect
of such holdings where the arrears of interest at 4 p.c.p.a. do not
amount to 40/., or is not a multiple thof, to issue to the holders thof a
fractional certificate in the Form following, &c.

3. The interest payable on the debenture stock during the nine years
from the 30th of April, 1892, shall be pd and satisfied at the following
rates, viz. : — For the four years commencing on the 1st of May, 1892,
and ending on the 30th of April, 1896, at the rate of 4 p.c.p.a. ; and
for the five years commencing on the 1st of May, 1896, and ending on



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 96 of 134)